Q: 2
The management of U is reviewing internal controls throughout the company. It has noted the
following:-
1. In the trade receivables section, journal adjustments are made by the clerks, without any
reference to their supervisor. Journal adjustments may relate to sales returns, discounts allowed, or
transfers between accounts.
2. In the purchasing department, the purchasing manager selects and approves all suppliers,
as they are the only person with sufficient experience to do so. They use a very limited number of
suppliers because they can rely on these suppliers to provide goods of the quality required at a
competitive price. They do not keep any documents in relation to negotiations with other potential
suppliers or other quotes obtained.
In relation to the above, which of the following statements are valid?
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